Which of the following public solutions would best address the problem of waste in London?

• A. Allowing private firms to voluntarily reduce waste
• B. Eliminating all recycling programs
• C. Implementing a city-wide tax on waste generation
• D. Subsidizing the production of single-use plastics

Answer: (C)

Verified step by step guidance

1. Step 1: Identify the nature of the problem — waste generation in London is a negative externality, meaning the social cost of waste is higher than the private cost borne by individuals or firms.
2. Step 2: Understand that private firms voluntarily reducing waste may not be sufficient because they do not internalize the full social cost, leading to under-provision of waste reduction efforts.
3. Step 3: Recognize that eliminating recycling programs would likely worsen the problem by reducing waste management efficiency and increasing environmental harm.
4. Step 4: Analyze the effect of subsidizing single-use plastics, which would encourage more waste generation, thus exacerbating the externality.
5. Step 5: Conclude that implementing a city-wide tax on waste generation aligns private incentives with social costs by making waste producers pay for the externality, thereby encouraging waste reduction and addressing the problem effectively.